Caregiving Businesses & Employment Laws: What's the Latest?

Who should read this blog: Caregiving registries or home care organizations in California

What major laws and regulations should caregiving registries know about?

The caregiving industry, which has historically operated in the shadows, has attracted increasing scrutiny in recent years. In 2016, California passed the Home Care Consumer Services Protection Act (HCSCPA), which imposed strict screening criteria on home care agencies working with caregivers. Two years later, in 2018, the U.S. Department of Labor (DOL) released Field Assistance Bulletin No. 2018-4 (“FAB”) for a specific subset within the home care industry: registry and matchmaking services for caregivers. The DOL bulletin from July 2018 is one of few guidelines that the DOL has issued for the caregiving industry.

What do California employment laws say?

In the meantime, between the passing of HCSCPA and the DOL’s field memo, California’s highest court issued a watershed decision, Dynamex Operations West, Inc. v. Superior Court of Los Angeles, which established a new and more rigorous standard for independent contractor classification. Under the Dynamex decision, when it comes to hiring someone as a contractor (not an employee) then the burden is on the hiring entity to show that:

1. The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact,

2. The worker performs work that is outside the usual course of the hiring entity’s business, AND

3. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

If the hiring entity cannot prove all the factors above, then a court will find that a worker is an employee under Dynamex standards.

The standard set out in Dynamex is more restrictive than previous tests. Previously, courts used a balancing test and evaluated many different factors, none of which were determinative; but now, the hiring entity must meet all three parts of the Dynamex test to successfully claim a worker is an independent contractor. As a result, businesses, including caregiving registries, will likely have a more difficult time defending themselves in an employment claim under the ABC test.

So what do all these employment laws and home care laws mean for California caregiving registries?

Taken together, these new state and federal labor guidelines indicate an environment that is increasingly protective of caregiving workers and less tolerant of caregiving entities that want to work with home care aides as independent contractors. More specifically, state laws in California appear to be much less forgiving than federal guidelines; even if the DOL memo suggests some leeway for registry businesses under federal laws, a caregiving operation which steps beyond a pure listing will have a difficult time defending itself against employment relationship claims under California laws.

For a more a more in-depth analysis of DOL’s field assistance bulletin and its implications for caregiving registries in California, check out our legal analysis of it here.